Neocloud stocks faced renewed volatility this week as investors weighed optimism around AI demand against growing concerns over debt loads and delayed data centre capacity. CoreWeave extended its recovery for a third straight session on Wednesday, rising 1.49% to $60.46 after a 7.9% jump in the previous session, but remained more than 30% below its level of a month earlier. Nebius Group and IREN also gained on Tuesday before sentiment shifted sharply.
On Thursday, the group fell in pre-market trading after Microsoft reported capital expenditure and finance leases of $45.2 billion for the quarter, up about 30% year over year but below the $50.7 billion average analyst estimate compiled by StreetAccount. Alphabet's third-quarter capital expenditure of $51.36 billion also missed expectations of $55.09 billion. CoreWeave and Nebius dropped about 7%, while IREN lost more than 5%.
Microsoft Chief Financial Officer Amy Hood said the shortfall was partly caused by delays in third-party infrastructure capacity deliveries. "Capital expenditures were $45.2 billion as some third-party capacity deliveries we expected in Q1 were delayed," Hood said, adding that second-quarter spending should exceed $50 billion and full-year spending should be about $170 billion. The timing matters for neocloud operators such as CoreWeave and Nebius, which are investing heavily in infrastructure ahead of expected demand.
Oppenheimer analyst Param Singh defended CoreWeave, arguing that the company could generate about $9 billion in annual free cash flow if it halted expansion, enough to meet debt obligations. He estimated roughly $83 billion in recoverable assets against about $42 billion in pro forma debt and $37 billion in other liabilities, and said unsecured debt holders could recover fully. CoreWeave's $2.8 billion of bonds issued in April at a 9.75% coupon traded at 79.5 cents on the dollar earlier this month, implying a yield above 15%, and the company has about $50 billion in debt.
Broad concerns persist. Gartner research indicated 80% of neocloud providers could cease independent operations by 2030, while Elon Musk warned debt markets have shut off access to money for companies without substantial non-AI data centre revenue, predicting consolidation among more than 200 neoclouds. Anthropic's IPO filing and strong results from SK Hynix supported AI sentiment during the week, but CNBC's Jim Cramer cautioned investors against declaring an all-clear, citing heavy debt burdens and rising borrowing costs.
Despite positive analyst commentary on Nebius, including an upgrade to Buy from Seeking Alpha and a reported €250 million financing for its data centre near Lille, the stocks remain sharply lower over the past month: CoreWeave down about 26%, Nebius down 23% and IREN down 30%.
